Genworth Financial (NYSE:GNW) reported its third-quarter earnings on Wednesday, and the company's results were pretty disappointing across the board. Not only did the company miss analysts' earnings expectations, but some areas of the business also produced extremely poor performance.

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So why was Genworth's quarter so bad, and what does the company plan to do about it? And after the post-earning drop in the share price, is it worth buying in now?

Why was the quarter so bad?
Including a $531 million pre-tax charge related to its long-term care claim reserves, the company lost $844 million, or $1.70 per share. Even without one-time charges, the loss of $0.64 per share was much worse than the $0.16 loss analysts expected.

Tom McInerney, Genworth's president, expressed his disappointment in the performance of the U.S. life insurance business, which singlehandedly lost $322 million during the quarter. And this is somewhat misleading, since life insurance policies themselves made money for the quarter. It is Genworth's long-term care business that produced the massive loss.

In fact, the company's other businesses, such as mortgage insurance and the other divisions, combined to produce a $5 million profit. The life insurance division was the problem.

Perhaps most disappointing to investors was McInerney's statement that the turnaround in Genworth's long-term care business (where most of the quarter's loss came from) is going to be more difficult and will take longer than the company thought, mainly because of the poor performance of Genworth's older-generation products.

This is particularly disheartening to investors. After all, shareholders knew things weren't great right now. However, the company's turnaround strategy and leading position in long-term care gave them hope for a bright future. Now, they don't seem to be so sure.

After the results were released, shares of Genworth plunged by about 14% to around $12.10. If these losses stand, the company will be trading for about 35% less than it was about six months ago.

Looking forward
The turnaround in the LTC business could still happen, but probably at a much slower rate than anticipated. In fact, the company sold more LTC and life insurance policies than it did in the previous quarter. It's just the poorly performing older policies that are the big burden.

Genworth is in the process of attempting to get states' approval to raise rates on their legacy policies. As of the most recent data available, 43 states had approved some kind of increase, although many of those were less than the company had been seeking. Genworth is trying to obtain the approval of the rest of the states and get some of the others to allow them to raise premiums further.

And there is definitely money to be made in long-term care. According to Genworth, there are 78 million Baby Boomers between 50 and 68, and 70% of them will need some type of long-term care in their lifetime. However, only 10% currently have any long-term care insurance, so there is definitely a lot of potential here, if the company can get its old policies under control.

Finally, as I mentioned earlier, Genworth's other businesses performed rather well. Sales of life insurance policies and annuities made money, as did Genworth's mortgage insurance business. The international portion of the mortgage insurance business, which is mostly Canada and Australia, performed very well, and Canada saw an 18% year-over-year increase in new insurance policies.

So is it a buy, or should investors stay away?
The stock was already ridiculously cheap, trading for about 40% of its book value before the post-earnings plunge. However, the task of making the long-term care insurance business profitable is not an easy one. As the company said, it'll take a long time and be more difficult than previously thought.

If you decide to invest in Genworth, it's entirely possible that you'll do really well in the long run as the company sells more LTC policies to an aging population. However, make sure you have plenty of time to wait, and that you're willing to ride out a whole lot of volatility along the way.

Matthew Frankel and The Motley Fool have no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.